United States District Court, N.D. Illinois, Eastern Division
August 17, 2005.
IN RE TRANS UNION CORP. PRIVACY LITIGATION.
The opinion of the court was delivered by: ROBERT GETTLEMAN, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs*fn1 in this multi-district action, have brought
a seven-count second amended consolidated putative class action
complaint charging defendants Trans Union, LLC, Acxiom Corp., and
MCI WorldCom Communications, Inc., and MCI WorldCom,
Inc.,*fn2 with various violations of the Fair Credit
Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. (Counts I, II, V
and VI); state law claims for invasion of privacy and
misappropriation (Count III); unjust enrichment (Count IV); and
violation of the California Business and Professional Code §
17200 (the "UCL") (Count VII).*fn3 Plaintiffs have moved for
certification of three classes: (A) a nationwide putative damage
class for defendants' willful violations of the FCRA; (B) an
Illinois class consisting of all Illinois consumers who had their
telephone number or other personal information sold or otherwise
disclosed to a third party in connection with a firm offer of
credit or insurance ("the Illinois Firm Offer Class"); and (C) a
California class for defendants' violations of the UCL through
the sale of target marketing lists. For the reasons set forth
below, the motion is granted in part and denied in part.
Fed.R.Civ.P. 23, which governs class actions, requires a
two-step analysis to determine if class certification is
appropriate. First, plaintiffs must satisfy all four requirements
of Rule 23(a): (1) numerosity; (2) commonality; (3) typicality;
and (4) adequacy of representation. These elements are a
prerequisite to certification, and failure to meet any one of
them precludes certification of a class. Second, the action must
also satisfy one of the conditions of Rule 23(b). Joncek v.
Local 14 International Teamster Health and Welfare Fund, 1999 WL
755051 at *2 (N.D. Ill. 1999) (and cases cited therein).
Plaintiffs argue that all three proposed classes satisfy the
requirements of Rule 23(b)(3), and that the UCL class also meets
the requirements of Rule 23(b)(2).
Trans Union and Acxiom have each raised a number of different
challenges to plaintiffs' motion, most of which focus on the
adequacy of representation requirement of Rule 23(a)(4),*fn5 and the requirements of Rule 23(b)(3), and all of which relate
equally to all three proposed classes. Both defendants have also
raised specific attacks on each of the three proposed classes.
Adequacy of Representation
Rule 23(a)(4) requires that "the representative parties will
fairly and adequately protect the interests of the class." This
requirement has three elements: (1) the chosen class
representative cannot have antagonistic or conflicting claims
with other members of the class; (2) the named representative
must have a sufficient interest in the outcome to ensure vigorous
advocacy; and (3) counsel for the named plaintiff must be
competent, experienced, qualified, and generally able to conduct
the proposed litigation vigorously. Joncek, 1999 WL 755051
Each defendant raises different challenges to plaintiffs'
ability to represent the proposed classes adequately. Acxiom
argues that the individual plaintiffs do not "know and understand
their rights and roles as to class representative." Acxiom points
to a number of depositions of certain named plaintiffs in which
they have indicated that they do not know what claims have been
asserted, what classes have been proposed, and which classes they
represent. This argument generally carries little weight when
assessing adequacy of representation. "[T]he class
representative's role is limited. It was found not to be enough
to defeat class certification in Surowitz v. Hilton Hotels
Corps., 383 U.S. 363, 366 (1966), that the named plaintiff did
not understand her complaint at all, could not explain the
statements in it, had little knowledge of what the lawsuit was
about, did not know the defendants by name, nor even the nature
of the misconduct of the defendants." Eggleston v. Chicago
Journeyman Plumbers' Local Union No. 130, 657 F.2d 890, 896
(7th Cir. 1991). Acxiom argues, however, that when coupled
with the fact that there is what it terms a "questionable
relationship between many of the class attorneys and the named plaintiffs," this lack of knowledge verifies that
"plaintiffs' counsel had manufactured this lawsuit and are
controlling it to a prohibitive degree."
The court disagrees. The fact that plaintiff Turner's son is a
lawyer and informed her of a potential claim does not mean that
she can not be a proper plaintiff. The whole point of the class
action mechanism is that very often potential plaintiffs are
unaware of their claims. Additionally, the fact that plaintiff
Wayne is a class representative in four lawsuits brought by his
counsel does not, by itself, establish that he is an improper
representative. Plaintiff Wayne has sufficient, albeit limited,
knowledge of the case, and defendants have produced no evidence
to suggest that his participation in other suits creates a
conflict for him in the instant action.
Moreover, as noted, under Rule 23(a)(4) the class
representative's knowledge is not generally the proper focus.
Instead, the court should focus on the competency of plaintiffs'
counsel and any conflicts between the named class representatives
and other class members. See Heastie v. County Bank of Greater
Peoria, 125 F.R.D. 669, 676 (N.D. Ill. 1989). There is no
question that the plaintiffs' attorneys are all very experienced
class action litigators who have vigorously pursued this
litigation.*fn6 As to Acxiom's argument that "plaintiffs'
counsel . . . manufactured this lawsuit," Acxiom forgets that the
genesis of this case was the FTC's successful enforcement action,
hardly a matter conjured up by opportunistic lawyers.
Acxiom also argues that representation of the class is
inadequate because some plaintiffs would be subject to
individualized defenses. In particular, Acxiom challenges
plaintiff Gogerty, arguing that she cannot represent the Illinois Firm Offer Class
because she is not currently a resident of Illinois and was an
Illinois resident for less than three of the eight years in
question. Even if Acxiom is correct, there are a number of other
Illinois plaintiffs qualified to represent the Illinois Firm
Offer Class. Thus, denial of class certification on this ground
would be inappropriate.
Trans Union's attack on plaintiffs' ability to represent the
proposed classes adequately takes a somewhat different tack.
Trans Union argues that the named plaintiffs damaged the class by
deciding to pursue only FCRA statutory damage claims for Illinois
residents in connection with firm offers of credit, thereby
waiving all other FCRA claims for other putative class members.
Trans Union argues that plaintiffs allege that it willfully
violated the FCRA by disclosing certain consumer information in
target marketing lists. The Act provides for statutory damages of
not less than $100 and not greater than $1,000 per violation.
15 U.S.C. § 1681n. Yet, according to Trans Union, plaintiffs seek
such statutory damages only on behalf of certain Illinois
residents, and not on behalf of the other 178 million people they
purport to represent. Thus, Trans Union argues that if
plaintiffs' target marketing claims go to trial, Illinois
residents can recover statutory damages of between $100 and
$1,000 per violation plus their share of punitive damages, while
residents of all other jurisdictions will be eligible only for
their share of any punitive award. Additionally, Trans Union
argues that if the class is certified and the case tried,
individuals who reside outside of Illinois would not have a
second chance to seek statutory damages under the FCRA because of
the prohibition against claim splitting.
This argument is faulty on a number of levels. First, contrary
to Trans Union's assertions, plaintiffs do not seek to certify a
class on behalf of all Illinois consumers for statutory damages
as a result of Trans Union's sale of target marketing lists. The
Illinois class seeks statutory damages for consumers whose
telephone numbers or other personal information was sold to third
parties in connection with a firm offer of credit. This is a much
smaller class than that described by Trans Union in its argument,
and Trans Union makes no effort to demonstrate how certification
of that class could prevent claims by consumers from other
jurisdictions whom plaintiffs do not seek to represent.
Moreover, and perhaps more importantly, Trans Union's argument
seeks to put plaintiffs into a "Catch-22" situation. In Trans
Union I, Trans Union argued against certification of a
nationwide statutory damage class because such a class action was
not the superior method for the fair and efficient adjudication
of the controversy. The argument was based in large part on the
enormity of the putative FCRA class approximately 190 million
people. The court agreed with Trans Union, holding that the
potential for damages, which were grossly disproportionate to any
actual harm, made a class action an inferior method to adjudicate
the FCRA claims. Trans Union I, 211 F.R.D. at 351. Having
defeated plaintiffs' efforts to represent all those allegedly
injured nationwide, Trans Union's suggestion that by seeking to
represent a smaller class plaintiffs have now sold out the
"rights of most putative class members" to "advance the interest
of no one other than plaintiffs' counsel" is disingenuous.
Plaintiffs have not waived any claims; they have attempted to
bring claims not prohibited by the court's earlier ruling.
Accordingly, the court rejects Trans Union's argument that
plaintiffs are inadequate class representatives.
Trans Union also argues that "plaintiffs' federal claims turn
predominately on facts and standards that are inescapably
individualized." Although not styled as such, Trans Union appears to be arguing that plaintiffs cannot satisfy Rule 23(b)(3), which
requires that questions of law or fact common to the members of
the class predominate over any questions affecting only
individual members, and that a class action is superior to other
available methods for the fair and efficient adjudication of the
controversy. Trans Union's main argument is that it sold "so many
different information products" during the period in question
that individual fact issues as to each product would necessarily
As it has throughout this litigation, Trans Union takes a
myopic view of the FTC proceeding generally and the 2001 District
of Columbia Circuit Court opinion in particular. In 1994 the FTC
summarily held that Trans Union's target marketing lists were
consumer reports, and that target marketing is not an authorized
use of consumer reports under § 1681b. The FTC ordered Trans
Union to stop selling target marketing lists. In FTC I,
81 F.3d 228 (D.C. Cir. 1996), the court agreed that selling consumer
reports for target marketing violates the Act, and remanded for
further evidentiary hearings on the FTC's finding that because
the mere "existence of a tradeline" was used for credit-granting
decisions, any list based on the existence of a tradeline
constitutes a consumer report. FTC II, 245 F.3d at 813. On
remand, after extensive discovery and a lengthy trial, the FTC
again found that Trans Union's target marketing lists contained
information that credit grantors use as factors in granting
credit and concluded that the lists are credit reports that could
not be sold for target marketing purposes. On appeal, the D.C.
Circuit affirmed the FTC's decision that the mere existence of a
tradeline is a factor in credit granting decisions. Id. at 814.
In the instance case, despite voluminous briefing, Trans Union
has not identified a single product (list) that was not created
from its List Master File. To be included in that List Master File, from which all target marketing lists are created, the
consumer must have a tradeline. Thus, the recipient of any Trans
Union list is informed that every person on that list had credit
activity. Therefore, every target marketing list constitutes a
credit report and cannot be sold for target marketing purposes.
Contrary to Trans Union's assertions, therefore, individual
issues would not predominate because there is no need to examine
every product sold to determine if it was a consumer report.
Of course, the fact that individual issues do not predominate
does not mean that certification under Rule 23(b)(3) is
automatic. A class action must also be superior to other
available methods for the fair and efficient adjudication of the
controversy. With respect to the proposed nationwide punitive
damage class the court agrees with Trans Unions that class
treatment is not the superior method. In Trans Union I, this
court rejected plaintiffs' request for a nationwide statutory
damage class, based in part on the enormity of the class, the
potential for catastrophic damages and the balanced statutory
scheme that provides for regulation and enforcement by the FTC.
Those same concerns militate against certification of a
nationwide punitive damage class.
Additionally, certification of a nationwide class for punitive
damages only, with no class claim for actual damages, would
emasculate the court's previous ruling and the statutory scheme
upon which it was based. One reason the court concluded that
individual rather than class actions are the superior method for
seeking damages, statutory or actual, is that both punitive
damages and attorneys fees are available in those individual
actions. It is the availability of both punitive damages and
attorney fees that provides the incentive for individuals with
relatively minor or no actual damages to bring suit. If the court
were to certify the proposed punitive damage class, a large incentive for bringing individualized damage actions would
be lost to every member of the nationwide class, which is
comprised of anyone injured by defendants' activities.
Disconnecting the availability of punitive damages from
individual claims for actual or statutory damages would thus
cripple the statutory scheme designed by Congress to achieve
compliance with the Act. Accordingly, the court concludes that a
nationwide punitive damage class is not the superior method for
the fair and efficient adjudication of the controversy and denies
certification of that class.
The same analysis does not hold true with respect to the
Illinois Firm Offer Statutory Damage Class. Although plaintiff
has not attempted to quantify the number of persons in that
proposed class, it is unquestionably large enough to satisfy the
numerosity requirement of Fed.R. Civ. 23(a)(1). It is not
necessarily so large, however, as to create the problems inherent
to a nationwide class. Trans Union suggests that the proposed
Illinois Class must consist of 8,170,000 people, resulting in a
potential minimum statutory damage of $817 million. It reaches
this conclusion, however, by taking 4.3% (Illinois' percentage of
the total U.S. population) of the potential 190 million
nationwide class members. This argument is unavailing, because
the proposed Illinois class includes only those consumers whose
telephone numbers or other personal information was improperly
sold in connection with a firm offer of credit or insurance. This
is but a small subset of the original proposed nationwide class,
consisting of every consumer whose name appeared in any target
marketing list. Because the proposed Illinois class is much more
limited in scope, the court concludes that a class action is the
superior method to adjudicate the claim. Accordingly, the court
grants the motion to certify the Illinois Firm Offer Class. The final proposed class is defined as all consumers residing
in California from January 28, 1995, to the present, who are
listed in Trans Union's list master file and, based on
information in defendants' data bases, had or may have had their
names, addresses or credit information sold or otherwise
disclosed to third parties through defendants' target marketing
lists or similar products or services. The proposed class seeks
damages for violations of the California UCL. As Trans Union
notes, a virtually identical proposed class was denied
certification by a California state court because the plaintiffs
could pursue a representative action for unfair competition
without satisfying class certification requirements. Frey v.
Trans Union Corp., Cal. Supp. Ct. No. 798893 (January 6, 2003).
That order was subsequently reversed by the California Appellate
Court, based on an application of recently enacted Proposition
64, which repealed the right under the UCL to bring a
representative action without meeting class certification
requirements. Frey v. Trans Union Corp., G031928 (Cal.Ct.App.
March 24, 2005). That court reversed the denial of class
certification and remanded the case to the trial court for
determination of whether the proposed class could meet the
certification requirements. Whether the requirements of
Proposition 64 can be applied retroactively, as the Frey court
did, is an issue that has divided the California appellate
courts. See Foundation Aiding Elderly v. Superior Court, No.
A109442, 2005 WL 752739, *2 (2005). Whether Proposition 64 should
be applied retroactively, and whether a class can be certified
under the UCL if it can, are issues unique to California law and
are currently being decided by the California court involving
essentially the same parties and the same issues. Therefore,
principles of comity direct this court to stay decision on
certification of plaintiffs' proposed UCL class until the
California courts have fully addressed the issue in the Frey litigation. See e.g.
Interstate Material Corp v. City of Chicago, 847 F2d. 1285
(7th Cir. 1988).
For the reason set forth above, plaintiffs' motion for class
certification is denied as to Proposed Class A, (the Punitive
Damage Class), granted as to Proposed Class B (Illinois Firm
Offer Class), and stayed as to Proposed Class C. The Illinois
Firm Offer class is defined as:
All consumers (as defined in 15 U.S.C. § 1681 a(c)
residing in the State of Illinois, from September 30,
1997 to the present, who were (i) listed in Trans
Unions' List Master File, and (ii) based on
information contained in defendants' databases had
their telephone number or other personal information
sold or otherwise disclosed to a third-party in
connection with a firm offer of credit or insurance.
This matter is set for a report on status for September 6,
2005, at 1:30 p.m. Counsel for plaintiffs in Morse v. Trans
Union No. 04-3336 (E.D. La.) is directed to be present to
discuss the pending motion with respect to that case.